VERTEX PHARMACEUTICALS INC / MAVRTX
VERTEX PHARMACEUTICALS INC / MA Fair Value Disclosure
Fair Value Measurements
The following fair value hierarchy is used to classify assets and liabilities based on observable inputs and unobservable
inputs used to determine the fair value of our financial assets and liabilities:
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table sets forth our financial assets and liabilities subject to fair value measurements by level within the
fair value hierarchy:
As of December 31, 2025 | As of December 31, 2024 | ||||||||||||||
Fair Value Hierarchy | Fair Value Hierarchy | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||
(in millions) | |||||||||||||||
Financial instruments carried at fair value (asset positions): | |||||||||||||||
Cash equivalents | $2,779.1 | $1,770.7 | $1,008.4 | $— | $1,687.1 | $613.3 | $1,073.8 | $— | |||||||
Marketable securities: | |||||||||||||||
Corporate equity securities | 16.6 | 16.6 | — | — | 36.6 | 36.6 | — | — | |||||||
U.S. Treasury securities | 1,864.9 | 1,864.9 | — | — | 1,602.0 | 1,566.8 | 35.2 | — | |||||||
U.S. government agency securities | 262.4 | — | 262.4 | — | 240.5 | — | 240.5 | — | |||||||
Asset-backed securities | 1,357.0 | — | 1,357.0 | — | 1,244.2 | — | 1,244.2 | — | |||||||
Certificates of deposit | 26.2 | — | 26.2 | — | — | — | — | — | |||||||
Corporate debt securities | 3,693.9 | — | 3,693.9 | — | 3,525.9 | — | 3,525.9 | — | |||||||
Commercial paper | 14.6 | — | 14.6 | — | 5.0 | — | 5.0 | — | |||||||
Foreign currency forward contracts | 6.2 | — | 6.2 | — | 130.1 | — | 130.1 | — | |||||||
Foreign currency forward contracts | 12.7 | — | 12.7 | — | 12.4 | — | 12.4 | — | |||||||
Total financial assets | $10,033.6 | $3,652.2 | $6,381.4 | $— | $8,483.8 | $2,216.7 | $6,267.1 | $— | |||||||
Financial instruments carried at fair value (liability positions): | |||||||||||||||
Foreign currency forward contracts | $(79.4) | $— | $(79.4) | $— | $— | $— | $— | $— | |||||||
Foreign currency forward contracts | (51.0) | — | (51.0) | — | — | — | — | — | |||||||
Contingent consideration | (79.0) | — | — | (79.0) | (76.9) | — | — | (76.9) | |||||||
Total financial liabilities | $(209.4) | $— | $(130.4) | $(79.0) | $(76.9) | $— | $— | $(76.9) | |||||||
Please refer to Note E, “Marketable Securities and Equity Investments,” for the carrying amount and related unrealized
gains (losses) by type of investment. Our cash equivalents primarily include money market funds and time deposits.
Fair Value of Corporate Equity Securities
We classify our investments in publicly traded corporate equity securities as “Marketable securities” on our consolidated
balance sheets. Generally, our investments in the common stock of publicly traded companies are valued based on Level 1
inputs because they have readily determinable fair values.
Please refer to Note E, “Marketable Securities and Equity Investments,” for further information on these investments.
Fair Value of Contingent Consideration
Our Level 3 contingent consideration liabilities are related to $678.3 million of development and regulatory milestones
potentially payable to former equity holders of Exonics Therapeutics, Inc., a privately-held company we acquired in 2019.
We base our estimates of the probability of achieving the milestones relevant to the fair value of contingent payments on
industry data attributable to gene therapies and our knowledge of the progress and viability of the associated Duchenne
muscular dystrophy programs. The discount rates used in the valuation model for contingent payments, which were between
4.1% and 4.5% as of December 31, 2025, represent a measure of credit risk and market risk associated with settling the
liabilities. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period.
The following table represents a rollforward of the fair value of our contingent consideration liabilities:
Year Ended December 31, 2025 | |
(in millions) | |
Balance at December 31, 2024 | $76.9 |
Increase in fair value of contingent payments | 2.1 |
Balance at December 31, 2025 | $79.0 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 9, 2022 | |
| 2020 | Feb 11, 2021 | |
| 2019 | Feb 13, 2020 | |
| 2018 | Feb 13, 2019 | |
| 2017 | Feb 15, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 16, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.